8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 8, 2018

ScanSource, Inc.

(Exact name of registrant as specified in its charter)

SC	00-26926	57-0965380
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6 Logue Court, Greenville, SC 29615

(Address of principal executive offices, including zip code)

864-288-2432

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨

Item 2.02. Results of Operations and Financial Condition

On May 8, 2018, ScanSource, Inc. (the "Company") issued a press release announcing its financial results for its third quarter ended March 31, 2018. A copy of the press release and accompanying CFO commentary are attached as Exhibits 99.1 and 99.2 hereto and incorporated herein by reference and also made available through the Company’s website at www.scansource.com. An updated investor presentation will be made available on the Company's website within approximately two weeks.

The information in Item 2.02 of this Report, including the exhibits, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any other filing under the Securities Act of 1933 or the Exchange Act.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

99.1 – Press release issued by ScanSource, Inc. on May 8, 2018. The information contained in the attached exhibit is unaudited and should be read in conjunction with the Company’s annual and quarterly reports filed with the Securities and Exchange Commission.

99.2 – CFO commentary for the financial results conference call held on May 8, 2018.  The information contained in the attached exhibit is unaudited and should be read in conjunction with the Company’s annual and quarterly reports filed with the Securities and Exchange Commission.

Exhibit Number	Description
99.1	Press release
99.2	CFO commentary

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ScanSource, Inc.
Date:	May 8, 2018	By:	/s/ Gerald Lyons
		Name:	Gerald Lyons
		Its:	Executive Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:
Gerald Lyons		Mary M. Gentry
Executive Vice President, Chief Financial Officer	- or -	Vice President, Treasurer and Investor Relations
ScanSource, Inc.		ScanSource, Inc.
(864) 286-4854		(864) 286-4892

SCANSOURCE REPORTS THIRD QUARTER RESULTS

Achieves 10% Net Sales Growth and 12% Gross Profit Growth

GREENVILLE, SC -- May 8, 2018 -- ScanSource, Inc. (NASDAQ: SCSC), a leading global provider of technology products and solutions, today announced financial results for the third quarter ended March 31, 2018.

	Quarter ended March 31,
	2018		2017		Change
	(in millions, except per share data)
Net sales	$	895.6	$	813.5	10	%
Operating income	17.9		20.0		(10	)%
Non-GAAP operating income(1)	27.8		26.2		6	%
GAAP net income	10.6		12.4		(14	)%
Non-GAAP net income(1)	17.5		16.4		7	%
GAAP diluted EPS	$	0.42	$	0.49	(14	)%
Non-GAAP diluted EPS(1)	$	0.68	$	0.65	5	%
(1) Non-GAAP results exclude amortization of intangible assets related to acquisitions and change in fair value of contingent consideration. A reconciliation of non-GAAP financial information to GAAP financial information is presented in the Supplementary Information (Unaudited) below.

“ScanSource delivered another quarter of very good financial results, with 10% net sales growth for both of our segments and 12% gross profit growth,” said Mike Baur, CEO, ScanSource, Inc. “Our teams did a great job this quarter achieving 5% organic sales growth, while executing our strategic plan for growth.”

For the third quarter of fiscal year 2018, net sales increased 10% to $895.6 million, driven by sales growth in both Worldwide segments. Organic sales growth, which excludes the impact from foreign currency translation and a recent acquisition, was 5.4%. Operating income decreased to $17.9 million from increased expense for the change in fair value of contingent consideration. Non-GAAP operating income increased 6% to $27.8 million, primarily from higher sales volume, higher gross margin and the addition of the POS Portal acquisition.

On a GAAP basis, net income for the quarter totaled $10.6 million, or $0.42 per diluted share, compared with net income of $12.4 million, or $0.49 per diluted share, for the prior-year quarter. Non-GAAP net income for the third quarter of fiscal year 2018 increased to $17.5 million, or $0.68 per diluted share.

Forecast for Next Quarter

For the fourth quarter of fiscal year 2018, ScanSource expects net sales to range from $940 million to $1 billion, diluted earnings per share to range from $0.48 to $0.54 per share, and non-GAAP diluted earnings per share to range from $0.74 to $0.80 per share. Non-GAAP diluted earnings per share exclude amortization of intangible assets related to acquisitions and change in fair value of contingent consideration.

Webcast Details and CFO Commentary

At approximately 4:15 p.m. ET, a CFO commentary, as a supplement to our press release and conference call, will be available on ScanSource's website, www.scansource.com (Investor Relations section). ScanSource will present additional information about

1

Exhibit 99.1

its financial results and outlook in a conference call today, May 8, 2018 at 5:00 p.m. ET. A webcast of the call will be available for all interested parties and can be assessed at www.scansource.com (Investor Relations section). The webcast will be available for replay for 60 days.

Safe Harbor Statement

This press release contains “forward-looking” statements, including the forecast of sales and earnings per share for next quarter, that involve risks and uncertainties. Any number of factors could cause actual results to differ materially from anticipated or forecasted results, including, but not limited to, changes in interest and exchange rates and regulatory regimes impacting our international operations, the impact of tax reform laws, the failure of acquisitions to meet our expectations, the failure to manage and implement our organic growth strategy, credit risks involving our larger customers and vendors, termination of our relationship with key vendors or a significant modification of the terms under which we operate with a key vendor, the decline in demand for the products and services that we provide, reduced prices for the products and services that we provide due both to competitor and customer actions, and other factors set forth in the "Risk Factors" contained in our annual report on Form 10-K for the year ended June 30, 2017, filed with the Securities and Exchange Commission. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Information

In addition to disclosing results that are determined in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company also discloses certain non-GAAP financial measures, which are summarized below. Non-GAAP financial measures are used to understand and evaluate performance, including comparisons from period to period. Non-GAAP results exclude amortization of intangible assets related to acquisitions, change in fair value of contingent consideration, acquisition costs and other non-GAAP adjustments.

Net sales on a constant currency basis, excluding acquisitions: The Company discloses the percentage change in net sales excluding the translation impact from changes in foreign currency exchange rates between reporting periods and excluding the net sales from acquisitions prior to the first full year from the acquisition date. This measure enhances the comparability between periods to help analyze underlying trends on an organic basis.

Non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted earnings per share: To evaluate current period performance on a more consistent basis with prior periods, the Company discloses non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted earnings per share (non-GAAP diluted "EPS"). These non-GAAP results exclude amortization of intangible assets related to acquisitions, change in the fair value of contingent consideration, acquisition costs and other non-GAAP adjustments. Non-GAAP operating income, non-GAAP net income, and non-GAAP diluted EPS measures are useful in assessing and understanding the Company's operating performance, especially when comparing results with previous periods or forecasting performance for future periods.

Return on invested capital ("ROIC"): Management uses ROIC as a performance measurement to assess efficiency in allocating capital under the Company's control to generate returns. Management believes this metric balances the Company's operating results with asset and liability management, is not impacted by capitalization decisions and correlates with shareholder value creation. In addition, it is easily computed, communicated and understood. ROIC also provides management a measure of the Company's profitability on a basis more comparable to historical or future periods.

ROIC assists management in comparing the Company's performance over various reporting periods on a consistent basis because it removes from operating results the impact of items that do not reflect core operating performance. ROIC is calculated as adjusted EBITDA over invested capital. Adjusted earnings before interest expense, income taxes, depreciation and amortization ("Adjusted EBITDA") excludes the change in fair value of contingent consideration and acquisition costs, in addition to other non-GAAP adjustments. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. Management believes the calculation of ROIC provides useful information to investors and is an additional relevant comparison of the Company's performance during the year.

These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that the Company reports may not be comparable to similarly titled amounts reported by other companies. Analysis of results and outlook on a non-GAAP basis should be considered in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP. A reconciliation of the Company's non-GAAP financial information to GAAP is set forth in the Supplementary Information (Unaudited) below.

2

About ScanSource, Inc.

ScanSource, Inc. (NASDAQ: SCSC) is a leading global provider of technology products and solutions, focusing on point-of-sale (POS), payments, barcode, physical security, unified communications and collaboration, cloud and telecom services. ScanSource's teams provide value-added solutions and operate from two segments: Worldwide Barcode, Networking & Security, which includes POS Portal, and Worldwide Communications & Services, which includes Intelisys. ScanSource is committed to helping its customers choose, configure and deliver the industry's best solutions across almost every vertical market in North America, Latin America and Europe. Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource was named one of the 2017 Best Places to Work in South Carolina and on FORTUNE magazine's 2018 List of World's Most Admired Companies. ScanSource ranks #647 on the Fortune 1000. For more information, visit www.scansource.com.

3

ScanSource Reports Third Quarter Results

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
	March 31, 2018			June 30, 2017*
Assets
Current assets:
Cash and cash equivalents	$	35,361		$	56,094
Accounts receivable, less allowance of $47,139 at March 31, 2018 and $44,434 at June 30, 2017	664,091			637,293
Inventories	569,538			531,314
Prepaid expenses and other current assets	71,923			56,322
Total current assets	1,340,913			1,281,023
Property and equipment, net	74,582			56,566
Goodwill	303,458			200,881
Net identifiable intangible assets	143,726			101,513
Deferred income taxes	12,795			29,491
Other non-current assets	52,501			48,829
Total assets	$	1,927,975		$	1,718,303
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt	$	471		$	—
Accounts payable	496,688			513,155
Accrued expenses and other current liabilities	96,006			104,715
Current portion of contingent consideration	40,802			30,675
Income taxes payable	7,500			7,730
Total current liabilities	641,467			656,275
Deferred income taxes	10,582			2,008
Long-term debt	4,957			5,429
Borrowings under revolving credit facility	276,730			91,871
Long-term portion of contingent consideration	60,976			83,361
Other long-term liabilities	55,467			42,214
Total liabilities	1,050,179			881,158
Shareholders' equity:
Common stock	66,501			61,169
Retained earnings	871,945			849,180
Accumulated other comprehensive income (loss)	(60,650		)	(73,204		)
Total shareholders' equity	877,796			837,145
Total liabilities and shareholders' equity	$	1,927,975		$	1,718,303

* Derived from audited financial statements.

4

ScanSource Reports Third Quarter Results

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
(in thousands, except per share data)
	Quarter ended March 31,						Nine months ended March 31,
	2018			2017			2018			2017
Net sales	$	895,637		$	813,538		$	2,852,408		$	2,650,895
Cost of goods sold	791,749			720,867			2,529,632			2,368,155
Gross profit	103,888			92,671			322,776			282,740
Selling, general and administrative expenses	72,691			63,853			220,642			193,999
Depreciation expense	3,352			2,663			10,059			7,155
Intangible amortization expense	5,103			4,217			15,600			11,537
Change in fair value of contingent consideration	4,801			1,960			28,595			3,921
Operating income	17,941			19,978			47,880			66,128
Interest expense	2,784			780			6,655			2,281
Interest income	(887		)	(1,040		)	(2,349		)	(2,948		)
Other (income) expense, net	252			667			691			(11,280		)
Income before income taxes	15,792			19,571			42,883			78,075
Provision for income taxes	5,143			7,147			20,118			27,799
Net income	$	10,649		$	12,424		$	22,765		$	50,276
Per share data:
Net income per common share, basic	$	0.42		$	0.49		$	0.89		$	1.99
Weighted-average shares outstanding, basic	25,572			25,262			25,503			25,311
Net income per common share, diluted	$	0.42		$	0.49		$	0.89		$	1.97
Weighted-average shares outstanding, diluted	25,606			25,400			25,607			25,458

5

ScanSource Reports Third Quarter Results

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Segment:
	Quarter ended March 31,
	2018			2017		% Change
Worldwide Barcode, Networking & Security:	(in thousands)
Net sales, as reported	$	604,322		$	548,971	10.1	%
Foreign exchange impact (a)	(12,949		)	—
Net sales, constant currency (non-GAAP)	591,373			548,971		7.7	%
Less: Acquisitions	(22,361		)	—
Net sales, constant currency excluding acquisitions (non-GAAP)	$	569,012		$	548,971	3.7	%
Worldwide Communications & Services:
Net sales, as reported	$	291,315		$	264,567	10.1	%
Foreign exchange impact (a)	(2,697		)	—
Net sales, constant currency (non-GAAP)	288,618			264,567		9.1	%
Less: Acquisitions	—			—
Net sales, constant currency excluding acquisitions (non-GAAP)	$	288,618		$	264,567	9.1	%
Consolidated:
Net sales, as reported	$	895,637		$	813,538	10.1	%
Foreign exchange impact (a)	(15,646		)	—
Net sales, constant currency (non-GAAP)	879,991			813,538		8.2	%
Less: Acquisitions	(22,361		)	—
Net sales, constant currency excluding acquisitions (non-GAAP)	$	857,630		$	813,538	5.4	%
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended March 31, 2018 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2017.

6

ScanSource Reports Third Quarter Results

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Segment:
	Nine months ended March 31,
Worldwide Barcode, Networking & Security:	2018			2017			% Change
	(in thousands)
Net sales, as reported	$	1,944,436		$	1,770,015		9.9	%
Foreign exchange impact (a)	(28,243		)	—
Net sales, constant currency	1,916,193			1,770,015			8.3	%
Less: Acquisitions	(56,620		)	—
Net sales, constant currency excluding acquisitions	$	1,859,573		$	1,770,015		5.1	%
Worldwide Communications & Services:
Net sales, as reported	$	907,972		$	880,880		3.1	%
Foreign exchange impact (a)	(9,273		)	—
Net sales, constant currency	898,699			880,880			2.0	%
Less: Acquisitions	(9,750		)	(2,863		)
Net sales, constant currency excluding acquisitions	$	888,949		$	878,017		1.2	%
Consolidated:
Net sales, as reported	$	2,852,408		$	2,650,895		7.6	%
Foreign exchange impact (a)	(37,516		)	—
Net sales, constant currency	2,814,892			2,650,895			6.2	%
Less: Acquisitions	(66,370		)	(2,863		)
Net sales, constant currency excluding acquisitions	$	2,748,522		$	2,648,032		3.8	%
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the nine months ended March 31, 2018 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2017.

7

ScanSource Reports Third Quarter Results

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Geography:
	Quarter ended March 31,
	2018			2017		% Change
United States and Canada:	(in thousands)
Net sales, as reported	$	653,537		$	613,157	6.6	%
Less: Acquisitions	(22,361		)	—
Net sales, excluding acquisitions(non-GAAP)	$	631,176		$	613,157	2.9	%
International:
Net sales, as reported	$	242,100		$	200,381	20.8	%
Foreign exchange impact (a)	(15,646		)	—
Net sales, constant currency (non-GAAP)	226,454			200,381		13.0	%
Less: Acquisitions	—			—
Net sales, constant currency excluding acquisitions (non-GAAP)	$	226,454		$	200,381	13.0	%
Consolidated:
Net sales, as reported	$	895,637		$	813,538	10.1	%
Foreign exchange impact (a)	(15,646		)	—
Net sales, constant currency (non-GAAP)	879,991			813,538		8.2	%
Less: Acquisitions	(22,361		)	—
Net sales, constant currency excluding acquisitions (non-GAAP)	$	857,630		$	813,538	5.4	%
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended March 31, 2018 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2017.

8

ScanSource Reports Third Quarter Results

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Geography:
	Nine months ended March 31,
	2018			2017			% Change
United States and Canada:	(in thousands)
Net sales, as reported	$	2,095,519		$	1,990,784		5.3	%
Less: Acquisitions	(66,370		)	(2,863		)
Net sales, excluding acquisitions	$	2,029,149		$	1,987,921		2.1	%
International:
Net sales, as reported	$	756,889		$	660,111		14.7	%
Foreign exchange impact (a)	(37,516		)	—
Net sales, constant currency	719,373			660,111			9.0	%
Less: Acquisitions	—			—
Net sales, constant currency excluding acquisitions	$	719,373		$	660,111		9.0	%
Consolidated:
Net sales, as reported	$	2,852,408		$	2,650,895		7.6	%
Foreign exchange impact (a)	(37,516		)	—
Net sales, constant currency	2,814,892			2,650,895			6.2	%
Less: Acquisitions	(66,370		)	(2,863		)
Net sales, constant currency excluding acquisitions	$	2,748,522		$	2,648,032		3.8	%
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the nine months ended March 31, 2018 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2017.

9

ScanSource Reports Third Quarter Results

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands, except per share data)
Non-GAAP Financial Information:
	Quarter ended March 31, 2018
	Operating income		Pre-tax income		Net income		Diluted EPS
GAAP measure	$	17,941	$	15,792	$	10,649	$	0.42
Adjustments:
Amortization of intangible assets	5,103		5,103		3,590		0.14
Change in fair value of contingent consideration	4,801		4,801		3,272		0.12
Non-GAAP measure	$	27,845	$	25,696	$	17,511	$	0.68
	Quarter ended March 31, 2017
	Operating income		Pre-tax income		Net income		Diluted EPS
GAAP measure	$	19,978	$	19,571	$	12,424	$	0.49
Adjustments:
Amortization of intangible assets	4,217		4,217		2,774		0.11
Change in fair value of contingent consideration	1,960		1,960		1,194		0.05
Non-GAAP measure	$	26,155	$	25,748	$	16,392	$	0.65

10

ScanSource Reports Third Quarter Results

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands, except percentages)
Non-GAAP Financial Information:
	Quarter ended March 31,						Nine months ended March 31,
	2018			2017			2018			2017
Return on invested capital (ROIC), annualized (a)	11.2		%	12.6		%	12.4		%	13.1		%
Reconciliation of Net Income to Adjusted EBITDA
Net income - GAAP	$	10,649		$	12,424		$	22,765		$	50,276
Plus: Interest expense	2,784			780			6,655			2,281
Plus: Income taxes	5,143			7,147			20,118			27,799
Plus: Depreciation and amortization	9,438			6,880			28,204			18,692
EBITDA	28,014			27,231			77,742			99,048
Adjustments:
Change in fair value of contingent consideration	4,801			1,960			28,595			3,921
Acquisition costs	—			—			172			833
Legal settlement, net of attorney fees	—			—			952			(12,777		)
Adjusted EBITDA (numerator for ROIC) (non-GAAP)	$	32,815		$	29,191		$	107,461		$	91,025
Invested Capital Calculation
Equity - beginning of quarter	$	860,787		$	787,536		$	837,145		$	774,496
Equity - end of quarter	877,796			808,719			877,796			808,719
Adjustments:
Change in fair value of contingent consideration, net of tax	3,272			1,194			19,018			2,241
Acquisition costs, net of tax	—			—			172			833
Legal settlement, net of attorney fees, net of tax	—			—			771			(8,047		)
Tax reform charges	—			—			6,689			—
Average equity	870,928			798,725			870,796			789,121
Average funded debt (b)	315,872			137,597			283,819			135,921
Invested capital (denominator for ROIC) (non-GAAP)	$	1,186,800		$	936,322		$	1,154,615		$	925,042
(a) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), plus change in fair value of contingent consideration and other adjustments, annualized and divided by invested capital for the period. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period.
(b) Average funded debt is calculated as the average daily amounts outstanding on short-term and long-term interest-bearing debt.

11

ScanSource Reports Third Quarter Results

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Non-GAAP Financial Information:
	Forecast for Quarter ending June 30, 2018
	Range Low		Range High
GAAP diluted EPS	$	0.48	$	0.54
Adjustments:
Amortization of intangible assets	0.14		0.14
Change in fair value of contingent consideration	0.12		0.12
Non-GAAP diluted EPS	$	0.74	$	0.80

12

EX-99.2

Exhibit 99.2 ScanSource, Inc. CFO COMMENTARY Q3 FY2018 CFO COMMENTARY Q3 FY 2018 FINANCIAL INFORMATION AND CONFERENCE CALL Q3 FY18 Results: Please see the accompanying earnings press release available at www.scansource.com in the Investor Relations section. The information NET SALES included in this CFO commentary is unaudited and should be read in conjunction with the Company’s SEC filings on Form 10-K for the year ended June 30, 2017 and subsequent reports on Form 10-Q. $896 million ScanSource will present additional information about its financial results and outlook in a conference call on Tuesday, May 8, 2018 at 5:00 pm ET. Forecast: A webcast of the call is available and can be accessed at $860 million to www.scansource.com (Investor Relations section). The webcast will be $920 million available for replay for 60 days. GAAP THIRD QUARTER SUMMARY DILUTED EPS We delivered both strong sales growth and non-GAAP profitability $0.42 growth during the third quarter of fiscal year 2018. Both Worldwide segments increased net sales 10% year-over-year. Operating results Forecast: $0.44 to $0.50 tracked our expectations with 5% year-over-year organic sales growth and a gross margin of 11.6%. GAAP diluted EPS of $0.42 includes a higher than expected expense for the change in fair value of NON-GAAP DILUTED EPS contingent consideration for Network 1 as a result of better than expected actual results. Both net sales and non-GAAP diluted EPS $0.68 were within our forecast range. For third quarter fiscal year 2018, a seasonally strong quarter for cash flows, we generated operating cash Forecast: $0.67 to $0.73 flow of $81 million, up from $48 million for the prior year quarter. Please see Appendix for calculation of non-GAAP measures and reconciliations to GAAP measures. scansource.com 1 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 HIGHLIGHTS Y/Y Q3 FY18 Q2 FY18 Q3 FY17 $ in millions, except EPS Change Net sales $895.6 $1,032.2 $813.5 +10% Gross profit $103.9 $113.0 $92.7 +12% Gross profit margin % 11.6% 10.9% 11.4% +21 bps SG&A expenses $72.7 $74.8 $63.9 +14% Operating income $17.9 $22.3 $20.0 -10% Operating income % 2.0% 2.2% 2.5% -46 bps Non-GAAP operating income $27.8 $34.7 $26.2 +6% Non-GAAP operating income % 3.1% 3.4% 3.2% -10 bps GAAP net income $10.6 $8.0 $12.4 -14% Non-GAAP net income $17.5 $23.0 $16.4 +7% GAAP diluted EPS $0.42 $0.31 $0.49 -14% Non-GAAP diluted EPS $0.68 $0.90 $0.65 +5% • Net sales of $896 million • Operating income of $17.9 million and GAAP EPS of $0.42 includes higher - 5% Y/Y organic growth intangible amortization and higher expense - Organic growth for both Worldwide for change in fair value of contingent segments consideration - Organic growth for North America, Latin • Non-GAAP operating income of $27.8 America and Europe million increased 6% Y/Y primarily from • Gross profit margin of 11.6% higher sales volumes, higher gross margin, and the addition of the POS Portal - Q/Q increase from lower mix of big deals acquisition in North America - Y/Y includes higher margins from POS • For Q3 FY18, effective tax rate of 32.6% Portal acquisition and non-GAAP effective tax rate of 31.9% • Non-GAAP EPS increased 5% Y/Y to $0.68 Non-GAAP operating income, non-GAAP net income and non-GAAP diluted EPS exclude amortization of intangibles, change in fair value of contingent consideration and tax reform charges. scansource.com 2 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 WORLDWIDE BARCODE, NETWORKING & SECURITY Q3 FY18 Q2 FY18 Q3 FY17 $ in millions Net sales $604.3 $719.8 $549.0 Gross profit $56.5 $62.0 $45.9 Gross margin 9.3% 8.6% 8.4% Operating income $11.6 $15.5 $11.2 Operating income % 1.9% 2.2% 2.0% Non-GAAP operating income $13.9 $17.9 $12.3 Non-GAAP operating income % 2.3% 2.5% 2.2% • Net sales of $604 million, up 10% Y/Y Net Sales, $ in millions - Includes POS Portal acquisition; organic Y/Y Growth +10% growth, up 4% Y/Y Y/Y Organic Growth +4% - Growth led by mobile computing, POS $800 business and networking $720 • Gross profit margin of 9.3% $700 - Q/Q increase from lower mix of big deals $619 $620 $604 $600 - Y/Y increase from addition of higher $549 margin POS Portal acquisition $500 • Operating income margin of 1.9% decreased 13 basis points Y/Y from higher intangible amortization $400 • Non-GAAP operating income margin of $300 2.3% increased 6 basis points Y/Y Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Organic growth, a non-GAAP measure, reflects reported sales growth less impacts from foreign currency translation and acquisitions. Non-GAAP operating income excludes amortization of intangibles and change in fair value of contingent consideration. scansource.com 3 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 WORLDWIDE COMMUNICATIONS & SERVICES Q3 FY18 Q2 FY18 Q3 FY17 $ in millions Net sales $291.3 $312.4 $264.6 Gross profit $47.4 $51.0 $46.8 Gross margin 16.3% 16.3% 17.7% Operating income $6.4 $6.8 $8.8 Operating income % 2.2% 2.2% 3.3% Non-GAAP operating income $14.0 $16.9 $13.9 Non-GAAP operating income % 4.8% 5.4% 5.2% • Net sales of $291 million, up 10% Y/Y Net Sales, $ in millions - Strong sales growth in Latin America Y/Y Growth +10% and North America Y/Y Organic Growth +9% - Intelisys net sales increased 20% Y/Y $400 • Gross profit margin of 16.3% - Unchanged Q/Q $304 $312 $298 $291 $300 $265 - Y/Y decrease from unusually high vendor program recognition in prior year $200 • Operating income margin decreased to 2.2% from a higher expense for the $100 change in fair value of contingent consideration $0 • Non-GAAP operating margin of 4.8% Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 decreased Q/Q and Y/Y Organic growth, a non-GAAP measure, reflects reported sales growth less impacts from foreign currency translation and acquisitions. Non-GAAP operating income excludes amortization of intangibles and change in fair value of contingent consideration. scansource.com 4 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 WORKING CAPITAL Q3 FY18 Q2 FY18 Q3 FY17 $ in millions Accounts receivable (Q/E) $664.1 $717.3 $565.2 Days sales outstanding in receivables* 64 60 60 Inventory (Q/E) $569.5 $581.8 $514.2 Inventory turns 5.5 6.2 5.6 Accounts payable (Q/E) $496.7 $515.3 $437.2 Paid for inventory days* 11.6 9.4 12.5 Working capital (Q/E) (AR+INV–AP) $736.9 $783.8 $642.3 * Excludes the impact of Intelisys for all periods; paid for inventory days represent Q/E inventory days less Q/E accounts payable days • Working capital of $736.9, up 15% Y/Y • Inventory turns of 5.5x with inventory up and down 6% Q/Q 11% Y/Y and down 2% Q/Q • Higher Y/Y working capital investment to • Paid for inventory days of 11.6 reflect support growth timing of accounts payable • Days sales outstanding in receivables increased to 64 days - Aging of receivables portfolio, primarily in North America - Offering of extended credit terms in certain international markets scansource.com 5 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 CASH FLOW AND BALANCE SHEET HIGHLIGHTS Q3 FY18 Q2 FY18 Q3 FY17 $ in millions Adjusted EBITDA (QTR)* $32.8 $39.4 $29.2 Adjusted ROIC (QTR)* 11.2% 13.3% 12.6% Operating cash flow (QTR) $81.0 $(46.8) $48.4 Operating cash flow, trailing 12-months $7.6 $(25.0) $112.0 Cash and cash equivalents (Q/E) $35.4 $35.4 $62.2 Debt (Q/E) $282.2 $360.9 $113.9 Net debt to adjusted EBITDA, trailing 12-months 1.8x 2.4x 0.5x Shares repurchased – # of shares (QTR) -- -- -- Shares repurchased – dollars (QTR) -- -- -- Remaining authorization under plan (as of Q/E) $99.7 $99.7 $99.7 * Excludes non-GAAP adjustments and change in fair value of contingent consideration • Adjusted EBITDA of $32.8 million, up • Cash and cash equivalent balances of 12% Y/Y, from higher sales volume and $35.4 million at 3/31/18, including $27.6 the addition of the POS Portal acquisition million held outside of the U.S. • Adjusted return on invested capital of • Net debt to trailing 12-months adjusted 11.2%, down from prior year due to EBITDA is 1.8x increased borrowings on revolving credit facility for POS Portal acquisition • No shares repurchased during the quarter • Generated strong operating cash flow of • Balance sheet remains strong and $81.0 million for the third quarter, in line provides us with the ability to execute our with expectations capital allocation plan scansource.com 6 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 Q4 FY18 OUTLOOK* For the quarter ending June 30, 2018: NET SALES GAAP DILUTED EPS NON-GAAP DILUTED EPS Forecast Range: Forecast Range: Forecast: Range $940 million to $0.48 to $0.54 $0.74 to $0.80 $1 billion per share per share Q4 FY17: Net sales $917 million Q4 FY17: GAAP diluted EPS $0.74 Q4 FY17: Non-GAAP diluted EPS $0.68 • Outlook as of May 8, 2018 • Non-GAAP diluted EPS excludes amortization of intangible assets, change in fair value of contingent consideration and acquisition costs • Forecast midpoint reflects organic sales growth in the low single digits for both segments • Reflects the following FX rates: $1.21 to EUR 1.00 for the Euro, $0.29 to R$1.00 for the Brazilian real (R$3.45 to $1), and $1.38 to GBP 1.00 for the British pound • Expect foreign currency translation to positively impact sales by approximately $7 million • Assumes an effective tax rate of 30.4% for Q4 FY18; for FY19, anticipate an effective tax rate of 26% to 27% • Expect interest expense over the next few quarters to be similar to the March quarter from higher interest rates and lower average debt balances; assumes interest expense will be approximately $2.6 million for fourth quarter fiscal year 2018 scansource.com 7 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 FORWARD-LOOKING STATEMENTS This CFO Commentary contains certain Although ScanSource believes the comments that are “forward-looking” expectations in its forward-looking statements statements, including statements about are reasonable, it cannot guarantee future expected EBITDA, return on invested capital results, levels of activity, performance or (“ROIC”), sales, GAAP diluted earnings per achievement. ScanSource disclaims any share (“EPS”), non-GAAP diluted EPS, foreign obligation to update or revise any forward- currency rates, tax rates and interest expense looking statements, whether as a result of new that involve plans, strategies, economic information, future events, or otherwise, performance and trends, projections, except as may be required by law. expectations, costs or beliefs about future events and other statements that are not NON-GAAP FINANCIAL INFORMATION descriptions of historical facts. Forward- In addition to disclosing results that are looking information is inherently subject to determined in accordance with United States risks and uncertainties. Generally Accepted Accounting Principles (“GAAP”), the Company also discloses certain Any number of factors could cause actual non-GAAP measures, including non-GAAP results to differ materially from anticipated or operating income, non-GAAP operating forecasted results, including but not limited to, income margin, non-GAAP net income, non- changes in interest and exchange rates and GAAP diluted EPS, adjusted EBITDA, ROIC regulatory regimes impacting our international and net sales excluding the impact of foreign operations, the impact of tax reform laws, the currency translation and acquisitions (organic failure of acquisitions to meet our growth). A reconciliation of the Company's expectations, the failure to manage and non-GAAP financial information to GAAP implement our organic growth strategy, credit financial information is provided in the risks involving our larger customers and Appendix and in the Company’s Form 8-K, vendors, termination of our relationship with filed with the SEC, with the quarterly earnings key vendors or a significant modification of the press release for the period indicated. terms under which we operate with a key vendor, the decline in demand for the products and services that we provide, reduced prices for the products and services that we provide due both to competitor and customer actions, and other factors set forth in the “Risk Factors” contained in our annual report on Form 10-K for the year ended June 30, 2017, and subsequent reports on Form 10-Q, filed with the Securities and Exchange Commission (“SEC”). scansource.com 8 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 APPENDIX: RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION Operating Income, Pre-Tax Income, Net Income & EPS – QTR ($ in thousands) Quarter Ended March 31, 2018 Operating Pre-tax Net Diluted Income income income EPS GAAP measure $ 17,941 $ 15,792 $ 10,649 $ 0.42 Adjustments: Amortization of intangible assets 5,103 5,103 3,590 0.14 Change in fair value of contingent consideration 4,801 4,801 3,272 0.12 Non-GAAP measure $ 27,845 $ 25,696 $ 17,511 $ 0.68 Quarter Ended December 31, 2017 Operating Pre-tax Net Diluted Income income income EPS GAAP measure $ 22,341 $ 20,310 $ 7,969 $ 0.31 Adjustments: Amortization of intangible assets 5,487 5,487 3,648 0.14 Change in fair value of contingent consideration 6,913 6,913 4,742 0.18 Tax reform charges (a) - - 6,689 0.26 Non-GAAP measure $ 34,741 $ 32,710 $ 23,048 $ 0.90 Quarter Ended March 31, 2017 Operating Pre-tax Net Diluted Income income income EPS GAAP measure $ 19,978 $ 19,571 $ 12,424 $ 0.49 Adjustments: Amortization of intangible assets 4,217 4,217 2,774 0.11 Change in fair value of contingent consideration 1,960 1,960 1,194 0.05 Non-GAAP measure $ 26,155 $ 25,748 $ 16,392 $ 0.65 (a) As a result of tax reform laws enacted in the United States and Belgium, the Company recognized a one-time charge of $6.7 million in the December quarter from the estimated impact of the inclusion of foreign earnings and revaluation of deferred tax assets and liabilities. (b) Acquisition costs are nondeductible for tax purposes. scansource.com 9 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 APPENDIX: RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION Net Sales, Constant Currency and Excluding Acquisitions (Organic Growth) – QTR ($ in thousands) WW Barcode, WW Comms. NW & Security & Services Consolidated For the quarter ended March 31, 2018: Q3 FY18 net sales, as reported $ 604,322 $ 291,315 $ 895,637 Foreign exchange impact (a) (12,949) (2,697) (15,646) Q3 FY18 net sales, constant currency 591,373 288,618 879,991 Less: Acquisitions (22,361) - (22,361) Q3 FY18 net sales, constant currency excluding acquisitions $ 569,012 $ 288,618 $ 857,630 Q3 FY17 net sales, as reported $ 548,971 $ 264,567 $ 813,538 Less: Acquisitions - - - Q3 FY17 net sales, excluding acquisitions $ 548,971 $ 264,567 $ 813,538 Y/Y % Change: As reported 10.1% 10.1% 10.1% Constant currency 7.7% 9.1% 8.2% Constant currency, excluding acquisitions (organic growth) 3.7% 9.1% 5.4% (a) Year-over-year sales growth excluding the translation impact of changes in foreign currency rates. Calculated by translating net sales for the quarter ended March 31, 2018 into U.S. dollars using the weighted average foreign exchange rates for the quarter ended March 31, 2017. scansource.com 10 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 APPENDIX: RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION Highlights by Segment – QTR Quarter Ended March 31, 2018 ($ in thousands) WW Barcode, WW Comms. YTD FY18 NW & Security & Services Corporate Consolidated Consolidated Net sales $ 604,322 $ 291,315 $ - $ 895,637 $ 2,852,408 GAAP operating income $ 11,566 $ 6,375 $ - $ 17,941 $ 47,880 Adjustments: Amortization of intangible assets 2,310 2,793 - 5,103 15,600 Change in fair value of contingent consideration - 4,801 - 4,801 28,595 Acquisition costs - - - - 172 Legal settlement - - - - 952 Non-GAAP operating income $ 13,876 $ 13,969 $ - $ 27,845 $ 93,199 GAAP operating income % (of net sales) 1.91% 2.19% n/m 2.00% 1.68% Non-GAAP operating income % (of net sales) 2.30% 4.80% n/m 3.11% 3.27% Quarter Ended December 31, 2017 ($ in thousands) WW Barcode, WW Comms. NW & Security & Services Corporate Consolidated Net sales $ 719,786 $ 312,426 $ - $ 1,032,212 GAAP operating income $ 15,542 $ 6,799 $ - $ 22,341 Adjustments: Amortization of intangible assets 2,309 3,177 - 5,487 Change in fair value of contingent consideration - 6,913 - 6,913 Non-GAAP operating income $ 17,852 $ 16,889 $ - $ 34,741 GAAP operating income % (of net sales) 2.16% 2.18% n/m 2.16% Non-GAAP operating income % (of net sales) 2.48% 5.41% n/m 3.37% Quarter Ended March 31, 2017 ($ in thousands) WW Barcode, WW Comms. NW & Security & Services Corporate Consolidated Net sales $ 548,971 $ 264,567 $ - $ 813,538 GAAP operating income $ 11,175 $ 8,803 $ - $ 19,978 Adjustments: Amortization of intangible assets 1,098 3,119 - 4,217 Change in fair value of contingent consideration - 1,960 - 1,960 Acquisition costs - - - - Non-GAAP operating income $ 12,273 $ 13,882 $ - $ 26,155 GAAP operating income % (of net sales) 2.04% 3.33% n/m 2.46% Non-GAAP operating income % (of net sales) 2.24% 5.25% n/m 3.21% n/m = not meaningful scansource.com 11 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 APPENDIX: RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION Average Return on Invested Capital ($ in thousands) Q3 FY18 Q2 FY18 Q1 FY18 Q4 FY17 Q3 FY17 Adjusted return on invested capital (ROIC), annualized (a) 11.2% 13.3% 13.0% 13.2% 12.6% Reconciliation of Net Income to Adjusted EBITDA Net income - GAAP $ 10,649 $ 7,969 $ 4,147 $ 18,970 $ 12,424 Plus: Interest expense 2,784 2,285 1,585 934 780 Income taxes 5,143 12,342 2,633 4,450 7,147 Depreciation and amortization 9,438 9,901 8,864 6,276 6,880 EBITDA 28,014 32,497 17,229 30,630 27,231 Adjustments: Change in fair value of contingent consideration 4,801 6,913 16,881 1,290 1,960 Acquisition costs - - 172 422 - Interest income related to tax settlement - - - (1,382) - Legal settlement, net of attorney fees - - 952 - - Adjusted EBITDA (numerator for ROIC)(non-GAAP) $ 32,815 $ 39,410 $ 35,234 $ 30,960 $ 29,191 Invested Capital Calculation Equity - beginning of the quarter $ 860,787 $ 852,976 $ 837,145 $ 808,719 $ 787,536 Equity - end of quarter 877,796 860,787 852,976 837,145 808,719 Adjustments: Change in fair value of contingent consideration, net of tax 3,272 4,742 11,005 680 1,194 Acquisition costs, net of tax - - 172 422 - Tax settlement and related interest income, net of tax - - 771 (5,370) - Tax reform charges - 6,689 Average equity 870,928 862,597 851,035 820,798 798,725 Average funded debt (b) 315,872 311,327 224,956 117,970 137,597 Invested capital (denominator for ROIC)(non-GAAP) $ 1,186,800 $ 1,173,924 $ 1,075,991 $ 938,768 $ 936,322 (a) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), annualized divided by invested capital for the period. Adjusted EBITDA reflects other adjustments for non-GAAP measures. (b) Average daily amounts outstanding on short-term and long-term interest-bearing debt. scansource.com 12 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 APPENDIX: RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION Net Debt and EBITDA Metrics ($ in thousands) Q3 FY18 Q2 FY18 Q1 FY18 Q4 FY17 Q3 FY17 Q2 FY17 Q1 FY17 Q4 FY16 Debt (Q/E) $ 282,158 $ 360,932 $ 285,763 $ 97,300 $ 113,934 $ 141,666 $ 166,141 $ 76,856 Less: Cash and cash equivalents (Q/E) (35,361) (35,435) (23,616) (56,094) (62,187) (45,071) (45,125) (61,400) Net debt (Q/E) $ 246,797 $ 325,497 $ 262,147 $ 41,206 $ 51,747 $ 96,595 $ 121,016 $ 15,456 Reconciliation of Net Income to Adjusted EBITDA Net income - GAAP $ 10,649 $ 7,969 $ 4,147 $ 18,970 $ 12,424 $ 23,037 $ 14,816 $ 12,925 Plus: Interest expense 2,784 2,285 1,585 934 780 912 589 440 Income taxes 5,143 12,342 2,633 4,450 7,147 12,744 7,908 5,678 Depreciation and amortization 9,438 9,901 8,864 6,276 6,880 6,588 5,224 4,584 EBITDA 28,014 32,497 17,229 30,630 27,231 43,281 28,537 23,627 Adjustments: Change in fair value of contingent consideration 4,801 6,913 16,881 1,290 1,960 1,791 169 (3,226) Acquisition costs - - 172 422 - 335 498 553 Interest income related to tax settlement - - - (1,382) - - - - Legal settlement, net of attorney fees - - 952 - - (12,777) - - Adjusted EBITDA (non-GAAP) $ 32,815 $ 39,410 $ 35,234 $ 30,960 $ 29,191 $ 32,630 $ 29,204 $ 20,954 Adjusted EBITDA, TTM (a) $ 138,419 $ 134,795 $ 128,015 $ 121,985 $ 111,979 $ 110,284 Net Debt / Adjusted EBITDA, TTM (a) 1.8x 2.4x 2.0x 0.3x 0.5x 0.9x (a) Adjusted EBITDA for the trailing 12-month period scansource.com 13 May 8, 2018

ScanSource, Inc. CFO COMMENTARY Q3 FY2018 APPENDIX: RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION Forecasted Range for EPS – Q4 FY18 Outlook ($ in thousands) Forecast for Quarter ending June 30, 2018 Range Low Range High GAAP diluted EPS $ 0.48 $ 0.54 Adjustments: Amortization of intangible assets 0.14 0.14 Change in fair value of contingent consideration 0.12 0.12 Non-GAAP diluted EPS $ 0.74 $ 0.80 scansource.com 14 May 8, 2018